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A method of modeling and diagnosing a discrete event system is proposed based on the colored Petri net. According to the special character of the fault diagnosis model, a new kind of encoding method, which is binary coding, is presented in detail. By using the given binary coding, the dimensions of the incidence matrix and state equation are reduced, and the operations for running a colored Petri net is easier. The given model is applied to analyzing and diagnosing a certain kind of diesel engine control system. The simulation results indicate that the problem of modeling this kind of system in a mathematic method is solved, a new and effective method is proposed to analyze and diagnose this type of system.